This question originally appeared on Quora: How did Y Combinator become super important to the startup world?
Here are some reasons.
- Y Combinator was founded in 2005, which makes it the first seed accelerator. It wasn't until a few years later that other accelerators started to take off. Starting early let YC build a network faster, improve selection methods, and observe more exits (startups average ~10 years for an exit).
- As of Q4 2014, there are over 700 companies and 1,400 founders that went through the program. In the latest batch, Sam Altman tweeted that this was the first ever triple-digit batch. These are huge numbers. YC's model gives them major statistical advantage considering the failure probability of startups.
- Today, YC is prestigious because founders have major incentives to attend. First, their acceptance rate is <3% (around 1/2 of Harvard), so getting in is an accomplishment itself. Second, demo day attract the best venture capital firms in the world. Third, companies get an automatic valuation boost just because they went through the program. Fourth, joining YC gives you access to its entire alumni network. Fifth, YC's terms are better than most other incubators (120K @ 7%). Sixth, VC's aren't going to mess with you because they wouldn't want to offend the other YC companies. Seventh, YC had several ultra successes (Airbnb, Dropbox, Stripe, Twitch, Heroku, Reddit, Zenefits, etc.) that other accelerators can't compete with.
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